Broker News

Loans to non-majors up across all market segments

The latest AFG Mortgage Index reveals non-major lenders posted a significant lift in market share over the December quarter.

Non-major market share grew from 28.8% in the prior quarter to 34.7% in the December quarter – a considerable increase on the same quarter in 2013 when non-majors held 22.4% market share.

The increase was seen across all market segments, most notably first homebuyers – which grew from 23.1% to 31.7% in the December quarter.

Non-majors also recorded a considerable lift in the refinancer market (up from 34.5% to 41.8%) as well as the investor market (from 25.5% to 31.4%), and among upgraders (from 26.6% to 30.9%).

“The major banks dropped market share across all sectors of the market in the final quarter of 2016,” notes AFG chief operating officer David Bailey.

“Many lenders have been increasing fixed and variable interest rates and have tightened lending to investors. This has encouraged consumers to examine their own situation and we are seeing many pick up the phone to their mortgage broker to determine if their loan is still the most appropriate for their circumstances.”

It’s a trend Bailey expects will continue. “An increasing number of consumers recognise that a mortgage broker is in the unique position of being able to provide a comprehensive view of the alternatives available across lenders and products,” he adds.

The index also reveals the overall number of investor loans increased by 2% to comprise 34% of all loans in the December quarter, while upgrader loans fell from 34% to 32%. Refinancer loans remained steady on 38%, with first homebuyer loans up slightly from 8% to 9%.

AFG also highlights it recorded 9% year-on-year lodgement volume growth, largely driven by the eastern states.

Bailey notes Victoria lead the way with a 23% increase for the year.

“After a number of years of lacklustre activity it has been encouraging to see Queensland record 18% growth across the 12 months,” Bailey says. “Continued growth was also evident in NSW with a 10% increase in lodgements for the year.”

However, it was a different story across the remaining states.

“South Australia remained flat across 2016 and the tough time experienced by the WA economy was evident with a 16% drop for the year. The Northern Territory also showed a drop of 18% across the year.”

According to Bailey, in Western Australia, the recent increase to the First Home Owners Grant and a loosening of eligibility requirements for Keystart lending is an attempt by the WA State Government to help lift the housing market and stimulate the construction sector in the state.

Additional highlights from the index include:

The average mortgage size grew from $479k to $488k.

New South Wales has the highest average mortgage size ($604k), which sits well above the national average.

South Australia has the lowest average mortgage size ($379k).

The average loan to value (LVR) ratio dropped slightly from 69.5% to 69% in the December quarter. “The national LVR for the final quarter of 2016 was 0.7% lower than the same period in 2015, which is good news as this means owner equity has improved. Historically the national LVR has been sitting within the 69% range across 2015 and 2016,” notes Bailey.

Victoria has the highest average LVR (71.4%), while New South Wales has the lowest (65.2%).

The most popular loan type remains standard variable, which comprised 66.3% of all mortgages, followed by fixed (16.4%), basic variable (9.6%), intro (5.1%) and equity (2.6%).